BT 8.

1 (Accounting estimate):
Previously, Alpha Company depreciated office equipment on a straight-line basis. On
January 1, X5, Alpha company decided to change the depreciation method from the
straight-line method to the accelerated method to provide more useful information. The
Company has recalculated the depreciation expense as follows:

Year Straight-line method Accelerated method

Before X4 5,000 CU 10,000 CU
Year X4 5,000 CU 8,000 CU
Year X5 5,000 CU 6,000 CU

Required:
Solving the above scenario under IAS 8 – Changes in accounting policies, accounting
estimates and errors. Assume that the corporate income tax rate is 20%, and the Tax
regulations accept the depreciation calculation options of the business.

BT 8.2 (Errors):
On June 1, 20x1, company XYZ discovered an error in its financial statements for the
year ended December 31, 20x0 because it recognized an expense of the research period
$30,000 as an Intangible asset on the 20x0 financial statements (the company should have
recognized $30,000 as an expense in 20x0), and has depreciated 10% respectively. The
corporate income tax rate is 20%. The following information is extracted from the
financial statements:

Statement of Financial Position 31/12/20x1 31/12/20x0

(before retroactive
adjustment)
Intangible assets ? 30,000
Accumulated depreciation ? 3,000
expense
Indistributed Profit ? 100,000

Income Statement Year 20x1 Year 20x0 Năm 20x0

(After retroactive (Before retroactive
adjustment) adjustment)
Revenue 70,000 ? 70,000
Cost of goods sold 27,000 ? 27,000
Allocated Research Cost 0 ? 3,000
Saling and Administrative 10,000 ? 10,000
Expenses
Undistributed Profits 33,000 ? 30,000
Current Income Tax Expenses 6,600 ? 6,000
(20%)
Profit after Tax 26,400 ? 24,000
Yêu cầu:
 1. Presentation and the journal entry (if any) on how to solve this error as required by
IAS 8 – Changes in accounting policies, accounting estimates and errors.
2. Identify the missing information at the "?", assuming there is no other information
in addition to the given data and the enterprise does not distribute profits.

Ex 8.3 (Accounting policies):

In 20X2 Delta Co changed its accounting policy on PPE depreciation: previously
depreciated assets, then switched to consider depreciation of each component part. At the
same time, the company decided to switch from the original cost model to the revaluation
model. It is not possible to determine the FV, useful time, residual value of each
component before 20x2. Income tax rate: 30%.
Additional Information: At the end of 20X1: the original cost of PPE is $25,000;
Accumulated depreciation: $14,000.
In the year 20X2, the annual depreciation expense if calculated using the historical cost
model is 1,500 USD. Survey information obtained by FV at the beginning of the year
20X2: 17,000 USD; estimated recoverable value: USD 3,000; useful life: 7 years.
Biết rằng: Cuối năm 20X1: giá gốc của PPE là 25.000 USD; khấu hao lũy kế: 14.000 USD.
Trong năm 20X2, chi phí khấu hao năm nếu tính theo mô hình giá gốc là 1.500 USD. Thông tin
khảo sát được FV đầu năm 20X2: 17.000 USD; giá trị thu hồi ước tính: 3.000 USD; thời gian hữu
dụng: 7 năm
Required: Presenting the accounting method to handle the above situation according to
IAS 8.
BT 8.4 ( Errors)
When auditing the 20X1 financial statements, the internal auditors of Vigilant Company
discovered that the company had omitted to recognize a depreciation expense of $60,000
of an intangible fixed asset in the 20X0 financial statements.
The following are excerpts from the income statement 20X0 and 20X1 before
adjustment:

2010 2011
Revenue $1,000,000 $1,200,000
Total Cost $900,000 $1,050,000

Retained Earning (not distributing) beginning the year 20X0 is $200.000 .

Income Tax Rate for 2 years is 25%/y. In both year there are not distributed dividents.
Required : Presenting the accounting method to handle the above error according to IAS
8.
Ex 8.6 ( Errors):
Evaluate the impact of the following errors on the financial statements for the year ended
31.12.20X3, the corporate income tax rate is 20%:
1. The enterprise liquidated fixed assets used for sale at their original cost of VND
240,000,000 (depreciated at VND 220,000,000) in February, 20X3, but not yet
recorded a decrease in fixed assets, but continued to calculate depreciation. The
depreciation rate of this asset is 10%/year. The proceeds from the sale of this
property are VND11,000,000 (this price includes 10% value added tax).
Accountants record entries after selling fixed assets:
Debt: 11,000,000
Cr Administration expenses: 10,000,000
Cr VAT: 1,000,000.
2. Construction work warehouse worth 900,000,000 VND was completed and
transferred to fixed assets in February 20X3. The test results show:
- The company did not capitalized the interest expense in the value of warehouse of
VND 60,000,000. The company has recorded in financial expenses in the period.
- The consulting and design costs of ACD Company has not been capitalized in the
value of the Warehouse which is 42,000,000 VND (Price paid and not deductible
value added tax). An advance for ACD of VND 30,000,000 is still "hanging" as an
advance payment to the supplier.
- This fixed asset has a depreciation rate of 6% per annum, which is included in
administrative expenses.